Why Friday's jobs report was rosier

Spurred by retail and construction hiring, San Diego County’s unemployment rate fell last month to match its five-year low.

While the retail job growth for the holiday season was key in the drop from October, over the past year the rate has come down 1.5 percent, showing an improving economy backed by middle class jobs.

The region’s unemployment rate fell to 6.8 percent in November, down from 7 percent in October, the state Employment Development Department said Friday. The 6.8 percent matched May’s jobless figure, when summer tourism hiring was up. Otherwise, the rate hasn’t been lower since October 2008, when it was 6.7 percent and on the rise during the Great Recession.

San Diego’s numbers are not adjusted to account for the seasonal boost in holiday hiring, so the unemployment rate generally falls toward the end of each year, and jumps in January when many of the retail workers are laid off. Adjusted for seasonality, county employers added 1,000 nonfarm jobs in November.

A year ago at this time, the jobless rate was 8.3 percent. The decline to 6.8 percent was for reasons economist like to see: the labor force grew by 0.2 percent, while the number of people unemployed dropped by 17.6 percent. The rate sometimes can drop if people stop looking for work, but that didn’t happen over the year.

“The labor force is not growing that fast, but job creation, when looking at civilian employment, is growing much faster,” said Esmael Adibi, economist at Chapman University.

In the past 12 months, county employers have added 23,000 nonfarm payroll jobs, a number called solid by Alan Gin, economist at the University of San Diego.

The types of jobs added were also a bright spot.

In a sign of the improving housing market, construction employment is up 9.3 percent in the last 12 months. The field has added 5,300 jobs over the last year, as median housing prices at one point saw 24.1 percent year-over-year gains.

“That’s a sign to me that this rebound in housing prices is now finally having an impact in terms of construction activity,” Gin said, noting that new residential housing permits this year are up at least 50 percent.

New construction projects have an economic ripple effect, such as a new home needing new furniture and appliances. That’s why economists consider them so important.

“It boosts other sectors,” Adibi said. “Part of the reason you see wholesale trade and transportation doing well is because of the construction sector.”

Education and health services had the largest year-over-year gain, adding 6,100 jobs.

Still, Gin said the unemployment rate would be 7.3 percent if seasonally adjusted, up from 7.1 percent in October. He called the November report mixed.

While the unemployment rate is down, annual job growth is only at 1.8 percent, matching its October rate, and well below its 2.6 percent pace in March, when employers were adding 32,600 jobs year-over-year. Job growth slowed in many regions, Adibi said, but economists speculated that the across-the-board federal budget cuts called sequestration were especially hitting San Diego’s defense and research laden economy.